Correlation Between OZ Minerals and ChampionX

Can any of the company-specific risk be diversified away by investing in both OZ Minerals and ChampionX at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining OZ Minerals and ChampionX into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between OZ Minerals Limited and ChampionX, you can compare the effects of market volatilities on OZ Minerals and ChampionX and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in OZ Minerals with a short position of ChampionX. Check out your portfolio center. Please also check ongoing floating volatility patterns of OZ Minerals and ChampionX.

Diversification Opportunities for OZ Minerals and ChampionX

0.07

Correlation Coefficient

OZ Minerals  ChampionX

Significant diversification

The 3 months correlation between OZMLF and ChampionX is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding OZ Minerals Limited and ChampionX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ChampionX and OZ Minerals is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on OZ Minerals Limited are associated (or correlated) with ChampionX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ChampionX has no effect on the direction of OZ Minerals i.e., OZ Minerals and ChampionX go up and down completely randomly.

Pair Corralation between OZ Minerals and ChampionX

Assuming the 90 days horizon OZ Minerals Limited is expected to generate 2.19 times more return on investment than ChampionX. However, OZ Minerals is 2.19 times more volatile than ChampionX. It trades about 0.04 of its potential returns per unit of risk. ChampionX is currently generating about 0.0 per unit of risk. If you would invest  1,797  in OZ Minerals Limited on September 25, 2024 and sell it today you would earn a total of  103.00  from holding OZ Minerals Limited or generate 5.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	15.13%
Values	Daily Returns

OZ Minerals Limited  vs.  ChampionX

OZ Minerals Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days OZ Minerals Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, OZ Minerals is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

ChampionX

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ChampionX has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's technical indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with OZ Minerals and ChampionX

The main advantage of trading using opposite OZ Minerals and ChampionX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OZ Minerals position performs unexpectedly, ChampionX can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in ChampionX will offset losses from the drop in ChampionX's long position.

The idea behind OZ Minerals Limited and ChampionX pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.